Market Wraps

Evening Wrap: ASX 200 reverses losses on China reopening rumours, iron ore hits US$100 a tonne

Tue 29 Nov 22, 4:41pm (AEST)

The S&P/ASX 200 closed 24 points higher, up 0.34%.

The local sharemarket reverses early declines thanks to another round of Chinese reopening rumours, iron ore miners and healthcare stocks did most of the heavy lifting to pull the index higher. Australian consumer confidence bounces, Fisher & Paykel shares surge on half-year results, Woodside's 2023 outlook disappoints and Collins Food expects inflationary headwinds to remain in place for FY23.

Let's dive in.


Today in Review

Tue 29 Nov 22, 4:15pm (AEDT)

Name Value % Chg
Major Indices
ASX 200 7,253.3 +0.34%
All Ords 7,442.0 +0.32%
Small Ords 2,880.1 +0.07%
All Tech 2,121.7 +0.15%
Emerging Companies 2,147.0 -0.13%
Currency
AUD/USD 0.6706 +0.82%
US Futures
S&P 500 $3,982.5 +0.31%
Dow Jones $33,941.0 +0.21%
Nasdaq $11,667.75 +0.44%
Name Value % Chg
Sector
Materials 17,484.7 +1.68%
Health Care 43,420.1 +0.56%
Information Technology 1,472.3 +0.25%
Energy 11,303.7 +0.03%
Communication Services 1,452.4 -0.05%
Financials 6,600.1 -0.09%
Consumer Staples 12,867.0 -0.13%
Industrials 6,562.1 -0.17%
Utilities 8,562.9 -0.30%
Consumer Discretionary 2,931.4 -0.48%
Real Estate 3,128.2 -0.82%

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Markets

The ASX 200 opened -0.4% lower but spent pretty much the entire day steadily grinding higher. China was rumored to soon announce a policy to officially end its zero-Covid strategy, emphasising a low fatality rate (approximately 0.025%) for new variants and how lockdowns have achieved a historical success in protecting people's lives, according to Shanghai Macro Strategist.

  • Materials led to the upside as the reopening rumours lifted iron ore heavyweights BHP, Rio Tinto and Fortescue close at least 2% higher

  • Healthcare is on a 10-day winning streak led by CSL. Fisher & Paykel also pulled the index higher after rallying 9.8% on half-year results

  • The market's reversal helped the Tech Index close 0.25% higher from session lows of -0.47%

  • Real Estate led to the downside, in parallel with an uptick in bond yields. The Australian Government 10-year yield rose 1.4 percentage points to 3.61%

  • 97 of the top 200 declined (49%)

Economy

Australian consumer confidence rose 1.8% to 83.1 for the week ended 27 November. 

  • Consumer confidence has rebounded 5.6% in the last three weeks to the highest level since early October

  • The Index is still very weak and down 22.9 points compared to the same week a year ago

  • Only 6% of Australians expect ‘good times’ for the Australian economy over the next twelve months

  • Long-term economic views remain constrained, with only 13% of Australians expecting ‘good times’ for the economy over the next five years 

Commodities 

“Commodities remained under pressure amid China’s battles with COVID-19. Protests added to demand outlook uncertainty for many commodities,” said ANZ senior commodity analyst, Daniel Hynes. 

  • Brent crude +2.8% to US$78/bbl

  • Copper +1.9% to US$3.68/lb

  • Iron ore futures +2.9% to US$100.95/t


Latest news


Post market brief

Some left field and spicy Chinese reopening rumours helped the ASX 200 rally from session lows of -0.40%. Two things come to mind:

  • Reopening rumours popped up a month ago only to be rejected by Chinese officials

  • Is this a buy the reopening rumour and sell the news kind of play?

The ASX 200 continues to chop higher, with hardly any breathers since the late October rally. We now look to how Chinese officials respond to these reopening rumours and Fed Powell's speech on Thursday morning as the next major direction driving catalysts.

Encouraging, the ASX 200 VIX is sitting around a seven month low. From a trading perspective and more broadly speaking, a low VIX means that breakouts are more likely to stick and less choppy price action. Although from a contrarian perspective and previous lows, it could indicate a calm before the storm.

ASX 200 VIX chart
ASX 200 VIX chart (Source: Market Index)

Indexes

S&P/ASX 200: Big reversal. Short-term moving averages like the 20-day continue to play catch up.

XJO chart
XJO chart (Source: TradingView)

S&P/ASX 200 Energy: Big reversal after Woodside's 2023 production guidance missed expectations. Noise aside, the Index is trying to defend recent highs.

XEJ chart
XEJ chart (Source: TradingView)

S&P/ASX 200 Healthcare: It's not often you see an Index go on a 10-day winning streak. Is this a sign of institutional accumulation in a defensive sector? It's run pretty hard from the 20-day moving average.

XHJ chart
XHJ chart (Source: TradingView)

Major announcements

Large caps (>$1bn)

  • Fisher & Paykel (FPH) +9.8% posted 1H21 revenue of $690.6m, down -23% but above the $670m guided by the company

    •  “Through the first half, there are positive signs that our hospital customers are working through their excess inventory holdings, and total group sales of our hospital consumables have increased sequentially on a month-by-month basis since May. This trend has continued in the second half to date.” said Managing Director Lewis Gradon 

  • Sonic Healthcare (SHL) 0% has agreed to invest $17.8m to acquire a 199.99% stake in Microba, a gut health testing business

  • Woodside (WDS) -0.35% full-year 2023 production guidance of 180-190m barrels of oil equivalent and capex between US$6-6.5bn, up a respective 19.4% and 48% compared to 2022 guidance (at midpoint)  

  • Collins Foods (CKF) -19.8% posted 1H23 revenue growth of 15% to $614.3m but underlying net profits fell -14.2% to $24.8m due to ‘significant inflationary headwinds’ which were expected to remain for the balance of FY23 

Mid-to-small caps

  • Ainsworth Game Technology (AGI) +9.1% AGM guided to approximately $18m in profit before tax for the six months ending 31 December 2022, up from $10.0m a year ago  

  • Immutep (IMM) +4.3% signed a Clinical Trial Collaboration and Supply Agreement with Merck and Pfizer for a Phase I clinical study in patients with orthelial cancer 

  • Sigma Healthcare (SIG) +3.3% secured a $250m extension of their receivables purchase agreement (debt) with Westpac 

  • Alpha HPA (A4N) +1.7% delivered its maiden aluminium nitrate precursor crystal at its HPA First Project in Queensland. Optimisation of product quality and production levels are now underway  

  • Praemium (PPS) -0.6% AGM notes total funds under administration rose 2% in 1Q22 to $41.4bn, achieved “against a backdrop of declining equity markets in that quarter”

  • Atlantic Lithium (A11) -2.6% completed a resource and exploration drilling programme at the Ewoyaa Lithium Project, noting multiple high-grade intersections both within and outside current mineral resource estimates   

Trading halts


Broker updates 

Ticker

Company

Broker

Rating

Target price

BOQ

Bank of Queensland

Credit Suisse

Neutral from Outperform

$7.50 from $10.00

CCX

City Chic Collective

Morgan Stanley

Equal-weight from Overweight

$1.20 from $2.85

CTD

Corporate Travel Management

Citi

Neutral

$18.49 from $23.14

EML

EML Payments

UBS

Neutral

$0.73 from $1.15

FMG

Fortescue

Citi

Sell from Neutral

$16.70

NHC

New Hope

Citi

Neutral from Sell

$4.50 from $4.60

WDS

Woodside Energy

Macquarie

Neutral

$40.00


Scans

Top Gainers

Code Company Last % Chg
MAP Microba Life Scie... $0.35 +59.09%
GFN Gefen Internation... $0.068 +28.30%
G88 Golden Mile Resou... $0.029 +26.09%
MPR Mpower Group Ltd $0.022 +22.22%
EXL Elixinol Wellness... $0.034 +21.43%
View all top gainers

Top Fallers

Code Company Last % Chg
WFL Wellfully Ltd $0.014 -26.32%
ICE Icetana Ltd $0.035 -22.22%
FGL Frugl Group Ltd $0.012 -20.00%
CKF Collins Foods Ltd $8.15 -18.83%
MKR Manuka Resources Ltd $0.15 -16.67%
View all top fallers

52 Week Highs

Code Company Last % Chg
FNXDA Finexia Financial... $0.28 +12.00%
PVT Pivotal Metals Ltd $0.04 +8.11%
BDM Burgundy Diamond ... $0.28 +7.69%
TRE Toubani Resources... $0.24 +6.67%
WGO Warrego Energy Ltd $0.22 +4.76%
View all 52 week highs

52 Week Lows

Code Company Last % Chg
WFL Wellfully Ltd $0.014 -26.32%
CCX City Chic Collect... $0.65 -12.16%
SLZ Sultan Resources Ltd $0.08 -11.11%
MXC MGC Pharmaceutica... $0.013 -10.71%
CG1 Carbonxt Group Ltd $0.094 -10.48%
View all 52 week lows

Near Highs

Code Company Last % Chg
OZBD Betashares Austra... $44.16 -0.27%
PCI Perpetual Credit ... $0.96 -1.03%
WVOL Ishares Edge MSCI... $35.64 -0.48%
NUF Nufarm Ltd $6.04 +0.17%
WBCPI Westpac Banking C... $103.75 +0.27%
View all near highs

Relative Strength Index (RSI) Oversold

Code Company Last % Chg
PEN Peninsula Energy Ltd $0.135 0.00%
CCX City Chic Collect... $0.65 -12.16%
MBH Maggie Beer Holdi... $0.195 +2.63%
FAR FAR Ltd $0.69 -2.13%
BYE Byron Energy Ltd $0.115 -4.17%
View all RSI oversold

Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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